Medicaid Expansion Challenges States

Abstract

The June 2012 Supreme Court ruling made it optional instead of mandatory for individual states to participate in the expansion of Medicaid eligibility to low-income individuals as means of covering people who cannot afford to purchase health insurance. The federal government will pay almost the entirety of the cost of expanding eligibility at least through 2020. Many states that have a history of expanding healthcare coverage using their state Medicaid programs signed on to expansion clearly stating both the benefits to the uninsured and to their state budgets. But many states resisted the opportunity to cover more low-income individuals, mostly adults, even with the funding coming from federal coffers. Many states with the highest numbers of uninsured were among those who sued to overturn the ACA and are strongly resisting expansion. Some of those states would incur significant state costs because they have limited enrollment in their Medicaid programs because they have set the income eligibility well below the incomes allowed by the federal government even before the ACA was passed. A significant number of states are debating whether and how to expand Medicaid eligibility because the governors of those states and their state legislatures disagree. Several Republican governors (e.g., Florida and Arizona) from states that were part of the ACA lawsuit want to take advantage of the federal money for expansion to make inroads in the number of uninsured in their states, to take advantage of the boost to the economy arising from the investment from federal dollars, and to support the healthcare industry in their states. The US Department of Health and Human Services is entertaining innovative approaches to implementing Medicaid expansion. Just as the states took some time to embrace the Medicaid program when it was first passed in enacted in 1965, it is likely that it will take time for states to find a way to expand Medicaid eligibility to low-income adults.